Uber to pay $245 million to settle Waymo's theft allegations

by MICHAEL LIEDTKE and TOM KRISHER, Associated Press

In 2016 file photo, the Waymo driverless car is displayed during a Google event in San Francisco. Uber is settling a lawsuit filed by Google’s autonomous car unit alleging that the ride-hailing service ripped off self-driving car technology. Both sides in the case issued statements confirming the settlement Friday, Feb. 9, 2018, morning in the midst of a federal court trial in the case. (AP Photo/Eric Risberg, File)

SAN FRANCISCO (AP) —

Uber is paying $245 million to Google's self-driving car spinoff to end a legal brawl that aired out allegations of a sinister scheme that tore apart the once-friendly companies.

The surprise settlement announced Friday came as lawyers for Uber and Waymo, a company hatched from Google, prepared to wrap up the first week of a trial that had attracted international attention.

Waymo filed its lawsuit nearly a year ago, adding to Uber's woes with allegations of a bold high-tech heist orchestrated by its former CEO, Travis Kalanick, and a former Google engineer. That engineer, Anthony Levandowski, subsequently went to work for Uber, and was later fired when he declined to answer questions about the theft charges, citing his Fifth Amendment right against self-incrimination.

Uber and its ride-hailing service had already been tarnished by the company's acknowledgement of rampant sexual harassment within its ranks, a yearlong cover-up of a major computer break-in, and the use of duplicitous software to thwart government regulators.

As with most settlements, the truce required some compromise by both sides. Uber had initially offered to settle the case for $490 million just before the start of the trial Monday, but that agreement didn't provide Waymo with enough assurances that its technology wouldn't be improperly used, according to two people familiar with the thinking of both parties in the lawsuit. The people asked not to be identified because the settlement talks were confidential.

Not long after Thursday's trial proceedings ended, the top lawyers from both companies, Uber's Tony West and Waymo's Kevin Vosen, met to hammer out an agreement. The resulting compromise cut Uber's payment in half, but provided Waymo with the guarantees that it wanted to prevent its technology from being used in Uber's autonomous cars.

The payment, to be made in Uber's stock, is a fraction of the nearly $2 billion in damages that a Waymo expert had estimated Uber's alleged theft had caused. But U.S. District Judge William Alsup had refused to allow Waymo to use that figure in the trial.

"This has the look of two companies trying to snatch victory from the jaws of defeat," said Dan Handman, a Los Angeles lawyer specializing in trade secrets for the firm Hirschfeld Kraemer. "You try to structure a settlement so both sides can spin it as a win-win situation."

Uber's current CEO, Dara Khosrowshahi, said in a statement that the company still maintains Waymo's trade secrets never made into Uber's autonomous cars. He also expressed "regret" for the company's actions while Kalanick was running the business. Kalanick resigned last June under pressure from investors upset about the Waymo lawsuit and other scandals enveloping the company.

Waymo alleged that Levandowski heisted eight trade secrets from Google before he departed from the company in January 2016. He founded his own startup, Otto, which Uber bought a few months later for $680 million. Kalanick has acknowledged discussing plans for Otto with Levandowski before he started it, though both he and Uber deny using any Google technology to build a fleet of self-driving cars.

Khosrowshahi apologized to Uber employees for any distraction arising from the clash with Google.

"The prospect that a couple of Waymo employees may have inappropriately solicited others to join Otto, and that they may have potentially left with Google files in their possession, in retrospect, raised some hard questions," he wrote.

Waymo said in a statement that the agreement will protect its intellectual property. "We are committed to working with Uber to make sure that each company develops its own technology," the statement said.